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Innovative Energy Access for Remote Areas - The LUAV Light Up a Village Project

Overview

The Light-up a village (LUAV) program is a rural development initiative designed to improve access to modern energy solutions in remote areas of developing countries. The initiative addresses the challenge of Pico PV market penetration by empowering rural communities to actively participate in lighting up their own villages using micro-solar systems. The LUAV business model was designed by an energy company, Barefoot Power (BFP), which began the LUAV field in 2012 in Uganda. The program incorporates local SACCOs and Community Based Organizations (CBO) as well as local governmental bodies in the identification and recruitment of participants.

A LUAV program is designed to involve at least 100 households per community by providing each home with its own power generation solar system to run lighting and mobile device charging services. The participating households are given the option to either pay for the micro solar power system upfront or to pay for it in 3 to 12 monthly installments. For this pilot program, BFP sourced for funding from private investors to operate a revolving fund which is managed the SACCOs and CBOs who have the mandate to manage debt recovery and keep the revolving fund active. Through this business model, 18 LUAV projects were implemented in Uganda during the 18 month trial period providing lighting and mobile charging services to 3,000 plus households. The program’s success has a growing interest and plans are underway to replicate it in South Sudan, Rwanda and Kenya in 2014[1].

Issues Presented

The sun belt is located 5 degrees above and below the equator; this is where there will be the highest yield for a solar system. Paradoxically, 95% of installations of solar systems are located outside the sun belt, mostly in Europe and North America.

The challenges of Modern Energy Technologies (METs) include:

Access to finance: Installing solar systems means you need to be able to pay for your electricity bill for next 5 years all at once. Individuals do not have access to large amounts of capital; the key to unlocking sub-saharan Africa market and southeast Asia is finance.

Awareness: There are currently 6 million households in Kenya without grid connection. At dusk, they light paraffin lamps. They are not educated about available technologies (PV, batteries, etc.), nor are they educated about how to use these technologies.

Access to technical support services. Users cannot bring their systems to a centralized place for support services, due to the cost of transportation and the cost of income lost by not working. Additionally, they need to have support provided by somebody they trust.

Enabling environment. Kenya’s 2016-2031 rural electrification plan does not consider solar technology, because the plan was drafted in 2009 and based the cost of solar on prices from 2008. In 2013, the price of solar has dropped by 70%. At the time of writing, the government sought to account for lowest-cost technology, so solar was eliminated.

The study compared diffusion patterns of mobile telephony tech (MTT) and METs. In Africa, there are 1 billion gadgets for mobile telephony, but only a few million METs.

The study identified success factors and made recommendations

Findings:

In Kenya, over 95% of the population has access to mobile technology, while only 16% have access to electricity. There is an opportunity for solar to piggyback on this vast mobile penetration.

MTTs were able to be successful with minimal government intervention because that industry has great entrepreneurial capacity; the industry for METs does not (yet)

Light Up A Village (LUAV) used a system devised by Barefoot Power (from Australia) and piloted programs in Uganda and Kenya. Barefoot Power sells micro systems and hypothesizes that ownership incentivizes people to take better care of systems.

The energy company in this arrangement has to address financing. The system is not a simple solar home system; it’s a solar system with 4 lamps and USB charging. The cost of 100 systems needed to be available at once; a financing body was brought on board to provide seed capital.

The energy company invested in technology and training, then approached community based organizations (CBOs), who were given the power to vet the individuals who were provided with solar home systems. The energy company provided a local technical team, whose members were selected from people who had previously repaired mobile phones. This training diversified their skill set. The energy company guaranteed that there would be at least 100 households per project, which ensured that there would be a sustainable market for these technicians.

The CBOs were able to do something energy company could not – provide awareness of products and create trust with community.

Users paid back the cost of systems in monthly installments.

The LUAV program has been replicated 18 times and has reached 3000 individuals. There is almost 0% delinquency; people are happy with products and they trust the CBO distributors.

Recommendations/Conclusion

Conduct a frequent review of national policies to make sure they’re in line with the decreasing cost of solar PV modules

Proximity to operational solar technology solutions increases uptake; i.e. if your neighbor has one, you’ll want to get the same thing

Leveraging the collaborative efforts of energy companies and local CBOs increases trust and reduces delinquency

Local collaboration improves the effectiveness of awareness campaigns.

Q & A

1. Big and small micro finance: How to motivate each?

Risk mitigation to drive down interests rates; many of the micro-finance groups are charging 30% interests rates.

His university is receiving a large PV installation with good interest rate

How far can you get to that 1.3 Billion number with subsidized funding offers